Weddings can be very expensive, what with venues, catering, transport, gowns, flowers, and photographs to pay for. According to figures from the Office for National Statistics, the average cost of a wedding in the UK is just under £20,000. Unless you have a substantial sum saved up in advance, the chances are that you will have to borrow some or all of the money that you need to pay for your dream wedding.
When it comes to borrowing money from a private lender, you essentially have two options – secured loans, and unsecured loans. In this article, we shall look at the pros and cons of each of these approaches in turn.
Unsecured loans, which are often called personal loans, do not require any assets to be put up as collateral. This makes them a lot more risky for the lender, as there is a chance that the borrower may default on the loan, leaving the lender out of pocket. As a consequence, the interest rates tend to be a fair bit higher than you would get with a secured loan, and the loan amounts offered tend to be a lot smaller. Credit checks are mandatory, and if you do not have a good credit record, you will be offered fairly unfavourable terms if you are offered a loan at all. However, if you do not own your own property, this may be your only option.
Secured loans, often referred to as homeowner loans, require the borrower to put up an asset, typically a property, as security for the loan. If you are unable to pay the loan back for any reason, the lender can demand the sale of that asset in order to recover the remainder of the loan amount. This makes them a bit more risky from a borrowing point of view, but a lot less risky from a lending point of view. As a consequence, lenders are in a position to offer larger loan amounts and lower interest rates with a secured loan than they would be prepared to offer with an unsecured loan. If you do not have a good credit record, then a homeowner loan may be the only option available to you, as credit checks are not usually required for secured loans. For more information about homeowner and personal loans, visit the Santander website.